Policy Brief Series
Policy Brief No. 4
Back to Basics
The policy brief on the root cause of the current financial crisis is published in Ideas At Work of Columbia Business School.
Policy Brief No. 3
Using Fair-Value Accounting, Fairly
Policy Brief No. 2
Policy briefs Nos. 1 and 2 summarize parts of "Debt vs. Equity: Accounting for Claims Contingent on Firms' Common Stock Performance, with Particular Attention to Employee Compensation Options", Columbia Business School, CEASA White Paper No. 1.
White Paper Projects
White Paper No. 2
Jul. 1, 2008
Topic: Fair Value Policy White Paper
This paper, the second in CEASA’s White Paper series, lays out principles under which fair value accounting is appropriate. Its “principles-based” approach embraces broad economic concepts but is also pragmatic and specific enough to guide practice. Accordingly, the pros and cons of fair valuing bank loans, core deposits, inventories, investments in subsidiaries, insurance contracts, performance obligations, and debt, to name a few balance sheet items, are resolved, leading to formal financial statement templates for the application of fair value accounting in specific industries.
For non-financial firms, fair value accounting under the principles is largely limited to assets and liabilities associated with financing activities. For operating assets and liabililties (employed in the business), fair value accounting is not appropriate, except in the case where their value under the business model varies one-for-one with market prices. The application of fair values is a little more complicated in the case of financial institutions where so-called financial assets and liabilities are employed in the business. But the same principles apply such that fair value is again appropriate when the value of these assets and liabilities varies directly with market prices rather than from their use in the business model.
White Paper No. 1
Jan. 3, 2005
Topic: Debt vs. Equity White Paper
This White Paper lays out a comprehensive solution to the problem of accounting for claims based the performance of a firm's stock price. The accounting covers employee stock options, stock appreciation rights, put and call options, convertible debt and preferred stock, warrants, and other hybrid securities. This issue has vexed the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) who have approached the problem on a piece-meal basis, leading to inconsistent treatments of claims that in substance are very similar. Access this project, including associated documents and presentations.